Problem Solvers Welcomed - To Buy Triplex of Not?

[Michael Pilolla]

*** To Buy Triplex OR Not?*** 

Hi BiggerPockets Peeps,

It's been a while since I've reached out. Hoping to get the incredible help I've usually gotten from this incredibly awesome community!

There’s a triplex on the market for $450K that probably needs $30-50K worth of cosmetic work at most. It’s mostly good to go but I still need to do an inspection to make sure there are no major issues. Here’s some quick and dirty math…

At a $450,000 Purchase price, 20% Down ($90k) at 7% I’m looking at a monthly payment of about $2,889 for the mortgage. Current Rents are pulling in $2775 monthly ($775+$750+$1250) So with 10% rent hikes on the two low units this year that moves up to $852+$800+$1250 = $2902. With room to grow the cash flow year over year till I hit market rents. The average rents are about $1200 in this area. Throw in taxes, insurance, maintenance, and capital improvements, it might not be the deal of the century but I think it's got legs.

I could pay cash for it but won’t of course. That said, I’m trying to find the right balance. I don’t want to buy it just to buy it but it seems like a good deal. I would be incredibly thankful for any help and guidance on how to proceed - if at all?

Let me know if there's any other info that would be helpful.

Very best,

Michael

[Julien Jeannot]

I like the way you are thinking: long term.

That's how I play my numbers, I don't look for "best" or "Unicorns", but for base hit properties that fit my long term strategy.

If it works with a rehab bump in rent, YOY rent increases, and conservative appreciation then I go for it.

Don't forget about the the principle paydown and tax advantages in the math.

Also, the attractive properties on market get a lot of competition and I've rarely if ever heard an investor say "I should have not bought this property." What I hear is: looking back, I think I overpaid, but I should have bought every single one like it 5 years ago.